Minimum Wage

The Department of Labor enforces the Fair Labor Standards Act (FLSA), which sets basic minimum wage and overtime pay standards. These standards are enforced by the Department's Wage and Hour Division, a program of the Employment Standards Administration.

Workers who are covered by the FLSA are entitled to a minimum wage of not less than $6.55 per hour effective July 24, 2008. Overtime pay at a rate of not less than one and one-half times their regular rate of pay is required after 40 hours of work in a workweek. Certain exemptions apply to specific types of businesses or specific types of work.

The FLSA does not, however, require severance pay, sick leave, vacations, or holidays.

In addition to the FLSA, the Wage and Hour Division enforces other labor laws related to wage payment. Among these are:

• the Davis-Bacon and Related Acts, which require payment of prevailing wage rates and fringe benefits on federally-financed or assisted construction;
• the Service Contract Act, which requires payment of prevailing wage rates and fringe benefits on contracts to provide services to the federal government;
• the Contract Work Hours and Safety Standards Act, which sets overtime standards for most federal service contracts, federally funded construction contracts, and federal supply contracts over $100,000; and
• the Walsh-Healey Public Contracts Act, which requires payment of minimum wage rates and overtime pay on federal contracts to manufacture or provide goods to the federal government.

The Family and Medical Leave Act (FMLA) provides for up to 12 weeks of unpaid leave for certain medical and family situations (e.g., adoption) for either the employee or a member of the covered and eligible employee's immediate family; however, in many instances paid leave may be substituted for unpaid FMLA leave.

The Immigration and Nationality Act of 1990 applies to employers seeking to hire nonimmigrant aliens as workers in specialty occupations under H-1B visas.

Who is Covered?

The Fair Labor Standards Act (FLSA) establishes standards for minimum wages, overtime pay, recordkeeping, and child labor. These standards affect more than 100 million workers, both full‑time and part‑time, in the private and public sectors.

The Act applies to enterprises with employees who engage in interstate commerce, produce goods for interstate commerce, or handle, sell, or work on goods or materials that have been moved in or produced for interstate commerce. For most firms, a test of not less than $500,000 in annual dollar volume of business applies (i.e., the Act does not cover enterprises with less than this amount of business).

However, the Act does cover the following regardless of their dollar volume of business: hospitals; institutions primarily engaged in the care of the sick, aged, mentally ill, or disabled who reside on the premises; schools for children who are mentally, or physically disabled or gifted; preschools, elementary, and secondary schools and institutions of higher education; and federal, state, and local government agencies.

Employees of firms that do not meet the $500,000 annual dollar volume test may be covered in any workweek when they are individually engaged in interstate commerce, the production of goods for interstate commerce, or an activity that is closely related and directly essential to the production of such goods.

The Act covers domestic service workers, such as day workers, housekeepers, chauffeurs, cooks, or full‑time babysitters, if they receive at least $1,500 (2007) in cash wages from one employer in a calendar year, or if they work a total of more than eight hours a week for one or more employers. (This calendar year threshold is adjusted by the Social Security Administration each year.)

An enterprise that was covered by the Act on March 31, 1990, and that ceased to be covered because of the increase in the annual dollar volume test to $500,000, as required under the 1989 amendments to the Act, continues to be subject to the overtime pay, child labor, and recordkeeping requirements of the Act.

The Act exempts some employees from its overtime pay and minimum wage provisions, and it also exempts certain employees from the overtime pay provisions alone. Because the exemptions are narrowly defined, employers should check the exact terms and conditions for each by contacting their local Wage and Hour Division office within the Department of Labor's Employment Standards Administration (ESA).